It refers to assessing the cost and the benefits of a prospect initiative in personal or professional life, in lieu of getting maximum returns from money spent, if offer passes the preliminary survey and feasibility study, a detailed CBA report is prepared, which consists of purpose of initiative, survey details, rcommendations, investment involved, benefits and pay back time.
The benefits which can be quantified are hard dollar savings, qualitative are called soft dollar savings and future benefits are called cost avoidance benefits. The soft dollar savings are difficult to justified.
ex: The cost purchasing new machine will reduce time, increase productivity and increase morale, but all this can't be quantified.
The cost avoidance here will be the doing away with getting new cabinets to record same data, more files to maintain record, more persons to man and process the same.
It is applicable on individual investment but again perception of benefit and cost is subjective.
In nutshell, just as there are two sides of the same coin, same is the cas here, which the investment planners ned to be mind full about.
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